Could CDMOs Replace the Need for Biopharma Incubators?

If you were to launch a biopharma startup today, where would you find the skills, talent, and space to bring your vision to life? Biopharma incubators are usually the answer.

These facilities provide an essential foundation for emerging companies, hosting the vital resources and support needed to drive the development of groundbreaking therapies. Programs like JLABS, BioLabs, and LabCentral provide startups with fully equipped labs, cutting-edge technologies, and access to networks of investors, mentors, and industry experts who can help turn ideas into reality. Some biopharma incubator facilities are often linked to big pharma companies - Johnson & Johnson’s JLABS or Bayer’s Co.Lab for example - whereas others operate as single locations tied to science parks, universities, or VC-backed communities.

There are many examples that demonstrate success stories that have been instrumental in tackling significant health challenges, enabling advancements in cancer treatments, rare diseases, and even COVID-19 therapies. For example, earlier this year, BMS acquired Karuna Therapeutics, which started in 2009 at Boston-based PureTech Health’s incubator. In 2010, Moderna started life as part of Flagship Pioneering, a prominent biotech incubator based in Cambridge, Massachusetts. Both are now valued in the billions.

However, while incubators are invaluable for startups, not everybody has access to them or can fully leverage their potential. This raises an important question: could CDMO companies be the answer to ensuring broader access to resources and expertise to startups to enable even more biopharma breakthroughs?

Biopharma Incubators Are Excellent If You Can Access Them

One of the real limitations with biopharma incubators is where they are located. Look through any list of incubators, and you will see established biotech hubs established in the usual locations - Boston, San Francisco, and Cambridge. That’s not too surprising given the wealth, talent and local government support available in the typical incubator locations, however, they do highlight the disparity with the rest of the world.

Biopharma talent located elsewhere around the rest of the world remains mostly underserved (minus a few localized regions) leaving regional talent untapped and critical localized health challenges unresolved. The need for expanding availability to biopharma skills, resources and talent for startups isn’t necessarily about equity (that’s a different conversation), but a practical opportunity to unlock innovation globally.

Emerging markets in Africa, Southeast Asia, and Latin America hold immense scientific potential but often lack the infrastructure needed to nurture biopharma startups. Establishing incubator-type resources in these regions would empower local innovators to develop therapies tailored to their unique healthcare challenges while diversifying the global biopharma ecosystem.

While incubators are instrumental in supporting early-stage biopharma development, could CDMOs be even better positioned to help startups navigate the complexities of scaling, especially outside of the currently available locations?

Could CDMO-Start-up Partnerships be Mutually Beneficial?

Startups inevitably face challenges in areas where CDMOs excel. With expertise in services - such as scalable manufacturing, regulatory compliance, and operational efficiency - could CDMOs offer startups the opportunity to focus on innovation while leaving the complexities of production and logistics as part of their outsourced competencies?

Additionally, the global rise of CDMO services has created a diverse and competitive market, where specialized support is available in nearly every facet of biopharma development; from early-stage research, clinical trial support, formulation development, packaging, distribution, supply chain management, and compliance with complex regulatory landscapes. CDMOs already have state-of-the-art facilities, established processes, and an experienced workforce which could be provided to startups without the need for substantial upfront investments.

However, for CDMOs, startups may not seem valuable enough to pursue - tight budgets, limited revenue, and high risk make them challenging partners. Yet, startups are the driving force behind biopharma innovation, and for CDMOs that are willing to adapt, they could offer immense long-term value potential.

Subsidized services, milestone-based payment models, or even deferred payments would lower barriers and foster trust between CDMO and startup partnerships. In return, exclusivity agreements or future collaboration commitments could ensure mutual growth. Is it time for CDMOs to adapt their business models and embrace startup partnerships as a path to redefining long-term growth?